Step away from the smart phones, everyone, especially if you’re about to brag about all the tax money your accountant saved you using “creative” techniques.
With the IRS suffering a tax collection gap of roughly $300 billion per year, the agency has turned to various forms of data mining and crunching, and it should come as no surprise that one of these tactics is checking up on your social media accounts.
The IRS began the practice of peering in on taxpayers’ public Facebook and Twitter pages in 2013 in order to glean any information that might lead to or support an audit. Naturally, that spooked the public, and the IRS initially denied these reports.
But it certainly seems like the agency is culling personal information to get an inside track on audit candidates, like someone who may claim a family vacation as a business expense, or be delinquent on their loans despite owning lavish cars. Because, as one CPA told me, it seems like the IRS has been showing up to audit hearings with a lot of personal data on his clients in the last few years.
I recently spoke to Kevin P. McQuillan, a Principal at The McQuillan Group. He has more than 25 years of experience working as a Certified Public Accountant, and he told me that the IRS has been purposely coy on the topic, but that doesn’t mean it isn’t happening.
“When the IRS first mentioned utilizing social media, it created quite a stir, and in response to that, they came out and were very specific to say that they weren’t going to use emails without some authorization. However, they didn’t say anything about social media,” he explained “The IRS has always had access to public information, such as what car you own, or what house you live in. In the past auditors have used the audit process to decide what information they will look into on a particular case. However, given recent cuts to the agency and the decreased number of auditors, they are now coming to audits with this information in hand”.
We know social media tends to be a form of PR for life: no one ever posts about another boring night watching TV. So when the IRS stumbles across a business owner who’s behind on their payroll taxes posing by a Ferrari or pictures of trip to Tahiti that don’t necessarily fit the profile of the “business trip” they wrote off, they’ll get a fair shake to make their case. But, is the human instinct to brag a little on Facebook unduly influencing the scope of the IRS’ inquiry?
“I think it has the potential to skew it, but just like any other audit, the taxpayer always has the right to explain their situation,” McQuillan said. “What we do know is that social media is almost certainly a part of how the IRS chooses which audits to do, because the inquiry seems to be laser-focused, and they know what to look for.”
Is this actually working? It’s hard to say. McQuillan says that there isn’t any concrete data on the matter quite yet, but that the median individual taxpayer can rest somewhat easily if they’ve posted something they’re worried about. With the IRS looking to make more of a dent in collection, they have bigger fish to fry than forgetting to report some eBay earnings.
“The recent trend in audits and collections, especially for the everyday person, is down, and the IRS is more interested in going after the bigger dollars right now,” he concluded. “With their resources reduced, they’re much more interested in taking their percentage from big earners and corporations. But social media does appear to be a significant part of the audit arsenal, and that in and of itself should give people pause.”
So before you go posting about your next big purchase, make sure you’ve settled up with the tax man, or you could be in for an uncomfortable few months.
You can check out the latest casting calls and Entertainment News by clicking: Click Here
Click the logo below to go to the Home Page of the Website
Click the logo below to follow ETInside on Twitter
Click the logo below to follow ETInside on Facebook
Click the logo below to follow ETInside on Instagram
Click the logo below to follow ETInside on Pinterest
Click the logo below to follow ETInside on Medium